FAQs on Power of Attorney

What is Power of Attorney?

Power of Attorney means a formal instrument by which one person empowers another to represent him, or act in his stead, for certain purposes. The donor of the power is called the principal or constituent; the donee is called the attorney or agent. The latter is not entitled to exercise his powers for his personal benefit at any point of time.

This instrument is guided by The Powers of Attorney Act-1882. As per the said Act, Powers of Attorney include any instrument empowering a specified person to act for and in the name of the person executing it.(Sec. 1-A)

What is the rationale behind empowering Power of Attorney?

As man becomes busier it becomes more and more necessary for him to depend on others for getting things done. The hectic activities of Natural persons (i.e. Businessmen/ industrialists) or Legal persons (Companies) have made the execution of Power of Attorney a must for delegation of its function. Thus with the help of this instrument one is given an authority whereby one is set in the place of other to act for him. It is also submitted here that a person need not be a lawyer to hold a Power of Attorney as an agent for someone else.

What are the essential ingredients of a Power of Attorney?

(i) It has to be given voluntarily;

(ii) It should be only for lawful purposes;

(iii) The principal and agent must be competent to contract i.e. parties must be major, of sound-mind; there should be no undue influence, no misrepresentation etc.;

(iv) The Power of Attorney is to be executed on a non-judicial stamp paper of appropriate value as applicable in the respective State, with one extra copy on a plane paper;

(v) Each page of the Power of Attorney and wherever the blanks are filled in should be initiated by the executants;

(vi) Signature of the executants and the Attorney should be attested by a Judicial Magistrate or a Notary Public.

What are the types of Power of Attorney?

There are two types of Power of Attorney: General and Special.

(i) General Power of Attorney (GPA):
Under GPA, principal empowers the agent with the right to carry out all legal acts on his behalf without restricting it to a particular transaction or act. It gives the agent a very broad power to act on behalf of the principal.

(ii) Special Power of Attorney (SPA):
Under SPA, the authority of the agent is restricted to act only in certain matters or only for particular transactions or to carry out a specific legal transaction for the principal as outlined in the deed. The agent’s Power of Attorney expires on the completion of the particular transaction.

Does a Power of Attorney require attestation by witnesses?

Yes, every Power of Attorney needs to be attested by two or more independent witnesses who are adults of sound mind.
Any major can sign as a witness, but it must be mentioned at this point that the witness has signed in his / her individual capacity.

How the wordings of Power of Attorney to be construed?

This depends on the clarity of the wordings employed. The general construction is that the agent is empowered to do or undertake only such acts which he is expressly authorized to do. However, certain incidental powers can be inferred to give effect to the terms contained in the Power of Attorney.

For example – If the PoA confers the power of sale then it can be inferred that it includes necessary powers for completing the sales transaction. But at the same time, unless, specifically authorized, the Agent will not be entitled to mortgage the property.

Can a company grant Power of Attorney?

Yes, a company happens to be a legal person and is very much capable of granting Power of Attorney provided it is so authorized by its Memorandum and Articles of Association.

What are the duties of agent?

There is no exhaustive list of duties to be performed by the agent but an indicative list goes as follows:

(i) Agent should always act in the best interest of the principal;
(ii) Should follow the instructions of principal religiously;
(iii) Should not make any secret profit out of the principal’s transactions;
(iv) Should maintain proper account of all transactions and submit the same to the principal, as and when required.

What should be the extent of authority of an agent?

Agent can act only to the extent authorized by the principal. Scope of the work is normally defined in the instrument in an unambiguous manner and it clearly specifies the nature of duties and responsibilities assigned to agent.

How to attach liability for different actions of agent?

Every act performed by the agent within the authority of the Power of Attorney is legally binding upon the principal granting it. Therefore, it is always suggested that this instrument should be given only to a trustworthy person, and only when absolutely necessary.

If the agent acts without the principal’s knowledge, or outside the power given to him in the document, the principal reserves the right to confirm or disown the act later. If the principal confirms it, then it becomes within the latter's extent of authority, otherwise the agent happens to be solely responsible for all consequences of his act. Under normal circumstances, as a fair practice, the agent should not go beyond whatever is prescribed in the instrument itself.

What is sub-delegation?

The transfer of authority by one person to another is termed as delegation of power. The person in whose favour the said authority is transferred is known as Delegate. When this Delegate transfers the authority to someone it is termed as Sub – delegation.

As per the maxim- ‘DELEGATUS NON POTEST DELEGARE’- Delegation cannot be made by a delegate. A delegated power cannot be further delegated.

Though we have sufficient examples of sub-delegation of power under administrative laws, the Powers of Attorney Act 1882 itself is silent on this. Therefore a holistic understanding can be developed by reading this Act with the Law of Agency and latest judgments of Hon’ble Apex Court. If we appreciate the same in the light of emerging exigencies in commerce and trade , then it appears that it is settled that without sub-delegation, probably things would not move as per desired pace.

Therefore, Sub-delegation is possible and very much correct also, provided the express provision for the same has been made in the PoA itself.

What can be the extent of sub-delegation?

If the express provision is made then Delegate can sub-delegate its power in consonance with the Power of Attorney through authorization letter. But in any case this power is limited to the power which has been delegated to him and the part of which he has been empowered to sub-delegate. He is not authorized to sub-delegate the power which is not vested in him at all.

Is Notarization necessary for PoA?

No, Signature of the executants and the Attorney can be attested either by a Judicial Magistrate or a Notary Public; but notarization is always easier process and people go for the same.

Is Registration necessary for PoA?

Requirement of registration of Power of Attorney deed is very limited. All PoAs (GPA or SPA) are not required to be registered under Registration Act-1908. However, the PoA providing power for transfer of immovable properties would require registration under Registration Act-1908. Section 17 of the said Act deals with the document of which registration is compulsory and Section 18 deals with such documents where it is optional.

What is revocation of Power of Attorney?

When the principal desires to withdraw the Power of Attorney granted to the agent, it is termed as revocation of Power of Attorney. It is done normally by issuing a notice of revocation to the agent personally.

An indicative list, when PoA stands revoked is as follows:
(i) principal himself revokes it;
(ii) agent renounces his right under the Power of Attorney;
(ii) principal dies or becomes insane or becomes bankrupt;
(iii) business for which the agent was appointed is over;
(iv) With the mutual consent of principal and agent;

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